As the sun rose today, the ship could be seen almost completely on its side.

Pictures showed a massive gash in the hull more than 150ft long, with a huge rock embedded in the side of the ship towards the stern.

At least three bodies were retrieved from the sea, with at least three more feared dead, coastguard spokesman Francesco Paolillo said. It has been reported locally that 69 people are still unaccounted for.

Those evacuated by helicopter were flown to Grosseto, while others, rescued by local ferries drafted in to help, took survivors to the port of Porto Santo Stefano on the nearby mainland.

The rescue operation is said to have involved five helicopters, from the coastguard, navy and air force.

Survivors far outnumbered Giglio's 1,500 residents, and island Mayor Sergio Ortelli asked for "anyone with a roof" to open their homes to shelter the evacuees.

The evacuees were also taking refuge in schools, hotels, and a church on the tiny island.

Mr Paolillo said the exact circumstances of the accident were still unclear, but that the first alarm went off about 10.30pm, about three hours after the Concordia had begun its voyage from the port of Civitavecchia, en route to its first port of call, Savona, in north-western Italy.

The ship's owners, cruise company Costa, described the incident as a tragedy.

A statement said: "Our first thoughts go to the victims and we would like to express our condolences and our closeness to their families and friends."

A statement on its website, which crashed this morning, said earlier: "Costa Cruises confirms the evacuation of about 3,200 passengers and 1,000 crew members on board the Costa Concordia.

"At this moment, the cause of the incident cannot yet be confirmed."

The liner had set off from Civitavecchia in Italy and was heading to Savona when it ran aground.

It had other scheduled stops in Marseille, Barcelona, Palma de Mallorca, Cagliari and Palermo.

According to Costa, around 1,000 Italians, 500 Germans and 160 French nationals were onboard, along with around 1,000 crew members.

Fabio Costa, who worked in a shop on the ship, said a number of people were jumping into the sea to swim ashore.

Describing the "panic" after the boat began to list, he told BBC Breakfast: "We were all working and all of a sudden we felt the boat hitting something and everything just started to fall, all the glasses broke and everybody started to panic and run.

"We could only feel that the boat had hit something, we had no idea how serious it was until we got out and we looked through the window and we saw the water getting closer and closer. Everything happened really, really fast and we saw the water coming in."

Mr Costa said that once the emergency alarm was set off people started to panic and push each other in a bid to get into lifeboats.

"A lot of people were falling down the stairs and were hurt because things fell on them," he added.

The worker said it took the crew a long time to launch the lifeboats as the vessel had listed so much.

He said: "We just saw a huge rock, that was probably where the ship hit, and people were having huge trouble trying to get on the lifeboats. So at that point we didn't know what to do so it took hours for people to get off the ship.

"It was easier for people to jump into the sea because we were on the same level as that water so some people pretty much just decided to swim as they were not able to get on the lifeboats."

Elizabeth Nanni, of Isola del Giglio's tourist information, said all passengers had been evacuated from the island to Port Santo Stefano on the mainland.

She told BBC News that rescuers "think they have got everyone".

"There was talk at some point that people were trapped inside but I can't confirm that, I have no idea really," she said.

Describing last night's rescue operation, she said: "Luckily the sea was calm and there was no wind which helped a lot yesterday.

"Of course it always takes some time to organise a rescue in these cases and it was a big shock to everyone.

"The boat was listing and everyone tried to pull together - this island has about 700 residents here so receiving 4,200 was quite a shock, even for us.

"So we tried to put them in churches and schools and in the tourist office I housed about 100 people in two rooms."

Malcolm Latarche, editor of global shipping magazine IHS Fairplay Solutions, said passenger reports of a power black-out and large 'boom' noise indicated it could have suffered an engine room explosion.

He said it was possible the cruise ship experienced the same problem that saw the Queen Mary 2 (QM2) lose power in September 2010 as she was approaching Barcelona.

The expert said a power surge or "harmonic interference" could have caused a malfunction in the generators feeding the ship's six diesel electric engines which was not overcome by back-up systems.

This would have caused the ship to lose navigational power and steering control and veer off course, he said.

"I would say power failure caused by harmonic interference and then it can't propel straight or navigate and it hit rocks," said Mr Latarche.

Sandra Cook, whose daughter Kirsty works as a dancer aboard the vessel, told BBC News she had to get down a rope ladder on to a boat to escape the listing Concordia.

Mrs Cook said: "Thank God she got off safely and survived it."

She added: "I asked whether she had anything, she'd lost everything, and she said that she was lucky to be alive and very thankful."

Mrs Cook said she was asleep and had not realised how serious the situation was last night.

She said: "I think I'm more shocked now that it's sinking in," and added she did not know where her daughter currently was.

Mrs Cook said there were eight dancers on the cruise, all British, who had got off safely.